Banks report stronger loan demand, easier credit standards -Fed

WASHINGTON Mon Feb 4, 2013 2:01pm EST

WASHINGTON Feb 4 (Reuters) - Banks eased U.S. lending standards somewhat over the last three months and reported stronger demand for business and auto loans and residential mortgages, according to the Federal Reserve's latest quarterly Senior Loan Officer survey released on Monday.

The January report, based on responses from 68 domestic banks and 22 U.S. branches of foreign banks, also asked if domestic banks had tightened lending standards to European banks, but found that only a small fraction had done so.

Signs of improved access to lending and stronger demand for debt would chime with more upbeat reports on consumer and business spending, as well as better news on U.S. housing.

But U.S. officials have been frustrated by the difficulty experienced by some households and businesses in obtaining credit, despite ample bank liquidity and overnight interest rates that the Fed has held near zero since late 2008.

"Modest fractions of domestic banks reported having eased their standards across major loan categories over the past three months on net," the Fed said. "Domestic respondents indicated that demand for business loans, prime residential mortgages, and auto loans had strengthened."

In addition to its regular assessment of lending conditions, the Fed also asked survey participants three specific questions.

In addition to the query on lending standards to European banks, it also quizzed the loan officers on their lending policies on commercial real estate (CRE), and the outlook for credit quality.

"Respondents indicated that they had eased selected CRE loan terms over the past 12 months on net," the Fed said, adding that "moderate to large fractions of banks expect improvements in credit quality in most major loan categories."

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.